Here Comes The Great Greek Debt Restructuring...errr..Reprofiling

It was not if, but when Greece would be forced to restructure its debts. Dow Jones is reporting that the first victims of the dubiously named "voluntary re-profiling" will be the major Greek banks, including The National Bank of Greece S.A.(ETE.AT), Alpha Bank A.E.(ALPHA.AT) and EFG Eurobank Ergasias S.A. (EGFEY). The current scheme being presented requires the Greek banks to extend the maturities of their debt holdings. In return for agreeing to the plan, the EU authorities would not require the Greek banks to raise any more capital or write down the value of their Greek government bond holdings. After all, the FASB proved that accounting methods are meaningless and can be changed whenever they become an inconvenience to the financial system.

And if the Greek banks refuse to go along with this ponzi scheme?

The ECB will simply stop funding the Greek banking system, which is currently on ECB life support. This is where government coercion comes in. If the Greek banks balk at the deal, the ECB pulls all financing, leaving the Greek banks insolvent, as no one in their right mind will accept Greek debt as collateral for new loans. Once the Greek banks are unable to rollover their debts, with near zero interest loans from the ECB, the great Greek tragedy will come to a crashing end and the world will have another banking crisis.

If this plan comes to fruition, it could help Greece limp along for a while longer because domestic creditors currently own about 38% of Greek government debt, according to the IMF. This scheme would also benefit the major French and European banks who have hundreds of billions of dollars of exposure to the PIIGS. It also shows that as the EU debt crisis worsens, the major banks are beginning to throw each other in front of the proverbial bus to save themselves--cannibalization by the banking elite at its finest. Next up, Spanish, Portugal, and Irish banks.

Black Swan Insights

Here Comes The Great Greek Debt Restructuring...errr..Reprofiling